This seminar will take place on May 16 at 15:00. The seminar will be in a hybrid format with:
- in-person session in the IST Alameda Campus, Room V0.15 (Civil Engineering Building)
- online, via Zoom https://videoconf-colibri.zoom.us/j/97616812412
Our seminars are free to attend and open to everyone. Please share with whomever may be interested.
Summary
I present evidence that firms serve as tax-free consumption vehicles. Drawing on a unique combination of data from an electronic invoicing program in Portugal (e-Fatura), I show that individuals who control firms shift 36% of their monthly personal expenditures to firms and 31% of their household expenditures. The effects are driven by owner-managers of small closely held firms through expenditure categories on the border between business and final consumption but are widespread among business managers across the whole income distribution. My results suggest that the government revenue losses due to consumption through the firm amount to 1% of GDP. Reallocating the tax savings and personal expenditures hidden within firms to the reported household income of business managers increases the Gini by one percentage point and the top 1% income share by half a percentage point.
Speaker's bio
David Leite is an applied public economist with a focus on public finance, particularly tax system design. His research leverages novel administrative datasets to explore critical issues such as tax evasion and tax enforcement and their implications for measuring reported and real income inequality. He recently completed my PhD in Economics at the Paris School of Economics and is an incoming postdoctoral researcher at the NBER in 2025–26.
Personal homepage: https://sites.google.com/view/davidleite/home